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DEBT-TO-INCOME RATIO (DTI)
Buying a home for the first time? 
Use our glossary to get to know the terms used in the real estate industry.

WHAT IS DEBT-TO-INCOME RATIO (DTI)?

Simply put, your debt-to-income ratio (DTI) is how much money a lender is willing to loan you based on what you make on an annual basis. It's a financial metric used by lenders to assess your ability as a borrower to pay back monthly payments. Your debt-to-income ratio is calculated by dividing the total monthly debt payments by your gross monthly income.

For example, let's say your car payment is $600 and your credit cards are $1,400. Your debt is $2,000. Then, let's say your income is $6,000.

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DTI Ratio = ($2,000 / $6,000) * 100% = 33.33% 

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This means your debt-to-income ratio is 33.33%, meaning 33.33% of your gross monthly income is being used to pay off debts. Lenders usually have maximum DTI ratio limits that they'll accept before approving a mortgage loan. 

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Danny specializes and services clients in the following cities and neighborhoods with a deep understanding of the real estate market in these communities.

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